First Homes scheme: What it will look like
The Ministry of Housing, Communities and Local Government has published further details on the government’s new First Homes scheme.
It aims to help first-time buyers purchase a home in their local area for a 30% discount on the open market price.
According to Government figures, this will save first-time buyers around £100,000 on the price of an average newly built property in England.
What you need to know
- In order to qualify as a First Home, properties must be marketed and sold at a discount of at least 30% below market value.
- In some parts of the country where property prices are very high, a higher minimum discount of either 40% or 50% on First Homes built in their local area can be arranged, if the Local Planning Authority can evidence the need for affordable homes.
- The 30% discount will apply in perpetuity, which means that future buyers of the property will be able to benefit. Every time a First Home is resold, the discount will be passed on to the next generation of homeowners.
- For the first three months, First Homes must be exclusively for buyers with local connections. After three months, the property will become available to all first-time buyers across England at a 30% discount.
- First Homes will be subject to price caps, so the most expensive properties are not eligible. These will be set at £250,000 across England and £420,000 in London.
- A First Home must be the buyer’s sole and primary residence. However, in response to unexpected life events, they can let out the property for up to two years.
- Buyers using the scheme will be subject to household income caps of £80,000 across England and £90,000 in London. Local Planning Authorities will be able to set lower income caps for the first three months of sale.
- First Homes should only be sold to first-time buyers. But, in some circusmtances, non-first-time buyers will be able to purchase them – for example key workers stepping up to their second property.
- First Homes should only be purchased using mortgage finance or a home purchase plan which covers at least 50% of the purchase value. In other words, you can’t get one if you have a deposit of more than 50% because that means you probably don’t need the scheme.
- A pilot scheme will initially deliver 1,500 First Homes through the Affordable Homes Programme.